Is Obamacare delay good for employers? Don't count on it

Are you one of the employers who breathed a sigh of relief when the Obama administration delayed by a year the employer mandate to provide health insurance under the Affordable Care Act?

Not so fast, says Peggy Bass, director of client services at Prescott Pailet Benefits in Dallas.

This postponement could end up being more trouble than it's worth for employers, she told me in an interview for a story about the impact of the delay that will appear in our upcoming print edition.

Picture, if you will:

• Your company delays providing coverage until 2015, as allowed by the change.

• Your employees sign up for coverage on the online marketplace, or health insurance exchange, scheduled to be operational by Oct. 1.

• Your employees qualify for the income-based tax credits or subsidies available through the exchange.

Now, fast forward to 2015:

• You offer a plan that meets the law's requirement that it cover 60 percent of health care costs and is deemed “affordable” under the health care law — defined as costing the employee 9.5 percent of the employee's income or less.

• You, by offering such a plan, have avoided the employer penalties associated with not providing health coverage for employees.

• But your employees, because you provide a qualifying plan, no longer qualify for tax credits or subsidies for what may be more robust coverage through the exchange.

That scenario could force the employee to pay more overall for their insurance simply because their employer is trying to comply with the law, Bass said.

It could even result in employees quitting or voluntarily reducing their own hours to continue receiving the subsidy and the more robust, lower-cost insurance offered by the exchange, said Bruce Sammis, CEO of Lockton Dunning Benefits.

“Employers may be inviting turnover in their workforce if they are not careful to consider the transitions caused at the employee level,” Sammis said.